Home Retail Group spent £150m buying 64m of its own shares at 233p apiece between April 2010 and March 2011. Now, with the shares priced almost two-thirds cheaper, the company can't even afford to give its owners a final dividend. This column asked six months ago whether that share buy-back was one of the world's worst and the question has now been answered.

Naturally, departing chairman Oliver Stocken didn't bother to explain today why he sanctioned a distribution of almost half the company's cash resources via a voguish share buy-back in preference to a plain-vanilla special dividend. In a rational world, boards announcing buy-backs would have to set out their reasoning at the time with reference to the price paid, as Terry Smith, chief executive of Tullett Prebon, has long argued.

At Home Retail there was a long list of reasons to be cautious in 2010-2011: the group's return on capital had fallen for three years in a row, so had operating profits and so had Argos' like-for-like sales. If Stocken and chief executive Duddy thought the worst had past and thus buying shares was a sensible way to use excess capital, they were grossly mistaken. Today's figures reveal a thumping 60% collapse in "benchmark" pre-tax profits to £102m and a 9% fall in same-store sales at Argos.

Stocken is leaving shareholders with the thought that dividends in future will be set "at a level which is sustainable and which reflects the trading prospects and financial position of the group." What he means is the dividend ain't coming back at the old level. The company says it is "not uncomfortable" with forecasts that profits will fall again this year to £75m.

The shares are down 13% today, partly because the City can't detect a detailed plan to revive Argos. A new managing director of the chain has been recruited but the first move made by John Walden, fresh from a spell as a management consultant, has been to appoint other management consultants, which presumably means the fightback starts next year.

Mass closures of stores have been ruled out since all but seven of the 748 Argos units are contributing a profit. Instead, the best idea seems to be to use the expiry of 230 leases at Argos over the next five years as an opportunity to demand lower rents from landlords. That plan should stand a reasonable chance of success. One might even call it a disciplined approach. If only Stocken and Duddy had displayed the same virtue when they found themselves with a spare £150m two years ago.